Post-Election Outlook from Washington

Post-Election Outlook from Washington

The biggest story of the year out of Washington, DC is no doubt the results of the mid-term elections. Democrats suffered huge losses in the House (63 seats) with the GOP claiming the Majority while Democrats barely held on to the Senate. With the each party controlling a chamber of Congress, the big picture for the next two years has the potential for gridlock with the GOP-controlled House passing bills which are then never brought up in the Democrat-controlled Senate (or vice versa). President Obama has veto power and many are calling on him to act as an honest broker to ensure that the federal government can work towards addressing our country's problems and restoring our economy.

With the 2010 elections still fresh in everyone’s minds, the SEMI office in Washington, D.C. would like to take this opportunity to review the year, the historic elections of the last month, and a look ahead to what those election results mean for the next year.

Export Control Reform

This has been an exciting year in the realm of export control reform. Defense Secretary Gates has led the charge to modernize the export control system under which many SEMI companies must operate for their sales to China and other destinations. While several reform efforts have occurred over the years, this one is distinguished by Cabinet-level leadership and the support of the President including a mention in State of the Union address. There have been serious talks within the administration and we are working closely with government officials as they consider ways to streamline the export control process and to revise the control lists. Some of the reforms would require Congressional approval and that likely would be tough given the divided Congress. However, much of the work can be done through the executive branch and the SEMI Export Control Working Group will remain closely involved.

A big success this year was the fruition of a multi-year industry effort to improve the export licensing requirements for etch equipment and wafer-handling systems (cluster tools). These categories are each subject to license requirements as part of the control list maintained through the Wassenaar Arrangement. The United States and over 30 other economies participate in Wassenaar and agree to a common set of controls (although there are differences in implementation). SEMI sponsored the industry proposals to improve the etch and cluster tool controls and the Wassenaar group approved these changes at the end of last year. SEMI worked with the United States government to finalize the changes in the domestic Export Administration Regulations and the Commerce Department announced their implementation in September.

R&D Tax Credit

Although the research and development (R&D) tax credit usually enjoys widespread bipartisan support, congressional developments in 2010 have complicated the picture. With the credit expired since the end of 2009, SEMI continues to work as a member of a broad coalition not only to extend the tax credit retroactively for this year but also to extend it through 2011 with the goal of making the credit permanent.

With the GOP taking control of the House, Rep. Dave Camp (R-MI) assumes the new role of chairman of the Committee on Ways and Means. Rep. Camp is a longtime champion of the R&D tax credit, and it is our hope that he will continue to push this as a priority in his new role. The Ways and Means Committee also oversees trade issues and it is possible that this panel and the new Congress might take up the pending free trade agreements (including a major one with Korea) and look for other opportunities to expand market opportunities abroad.

American Innovation Agenda

The America COMPETES Reauthorization to authorize increased funding levels for R&D funding, education, and basics science research has suffered a similar election year fate as the R&D tax credit, although there is still some slim hope of the bill passing before the end of the year.

SEMI remains active in this area, recently co-hosting a reception with the Congressional High Tech Caucus to introduce ourselves to new Members of Congress and to strengthen bonds will old friends alike. As for the new Congress itself, Rep. Ralph Hall (R-TX) is in line to take the reins of the Committee on Science and Technology. He worked with the former Democratic chair in writing the original America COMPETES Act and should continue to be an advocate in the areas of American competitiveness and innovation.

High-Skills Immigration Reform

Immigration was once again a topic that was “too hot to touch” for members of Congress in an election year. Rep. Lamar Smith (R-TX) will become chairman of the committee of jurisdiction, the Judiciary Committee. He takes a hard-line view on illegal immigration issues, so it is unlikely Congress will be able to take a serious run at comprehensive immigration reform in the next year although some might talk about it for campaign purposes. This could complicate targeted reform options for high-skills legal immigration even though Smith has been supportive of some of these measures in the past.

Solar PV

The SEMI D.C. office was active this year in promotion of Solar PV, including presenting the SEMI White Paper of Global Best Practices for Feed-in Tariffs at a Congressional briefing in January. SEMI also organized a federal public policy session at Intersolar North America that featured many industry experts as well as John Lushetsky, director of the Solar Technologies Program at the Department of Energy (DOE) and a discussion led by Rep. Jay Inslee (D-WA). The SEMI PV Group has formed a Public Policy Committee and we encourage interested companies to get involved (contact jgirard@semi.org).

During the current Congress, making legislative progress on many energy priorities has been tied to passage of climate change legislation. While a controversial cap-and-trade bill passed the House, the Senate did not finalize a bill. Many policies have been on hold as a result and face limited prospects for action in the lame-duck session. Priorities include extension of the successful grant-in-lieu of the investment tax credit program which expires in a few weeks and expansion of the over-subscribed advanced energy manufacturing tax credit.

Sen. Jeff Bingaman (D-NM) will remain the chairman of the Senate Energy and Natural Resources committee. Given his long track record of support for both semiconductor and solar policies, SEMI presented him with the 2010 SEMI North America Government Leadership Award in May. In addition, Sen. Lisa Murkowski (R-AK), who had joined with Sen. Bingaman to pass a comprehensive energy bill through their committee, survived the political challenge of her life and mounted a rare but successful write-in bid to return for her second full term as the senior Senator from Alaska. We urge them to continue to work together in support of SEMI public policy priorities such as the renewable energy standard (RES).

While there is competition, Rep. Fred Upton (R-MI) is favored to become chair of the Committee on Energy and Commerce. Rep. Upton is considered to be one of the more moderate members of the Republican Conference. While Upton probably can be counted on to support high tech in general, we expect to see decreased emphasis on solar from the committee. As we look to next year, SEMI will continue to work with Congress, the DOE, and other federal agencies to push for the support of the PV manufacturing supply chain and continued increased deployment of PV technology across the United States.

Let’s Not Get Ahead of Ourselves

Before the end of the year, Congress still has some important work to do. The two immediate issues before the “lame duck” Congress are extension of the Bush tax cuts and appropriations to continue to fund the government. While a number of options for dealing with both issues exist, there is no clear path at the moment for resolving either issue. It is possible that either or both could be pushed off until the new Congress begins in January— although there is a lot of pressure to resolve the tax issue so that workers do not see their taxes increase during a recession.

As you can see, it’s been a busy year in Washington and will continue to be an exciting place with a lot of action on issues important to the industry. If you have any questions or comments regarding SEMI’s work in D.C., please feel free to contact Maggie Hershey (mhershey@semi.org) or Jamie Girard (jgirard@semi.org).